Murdoch's World

by David Folkenflik

  Lewis was also playing to a New York audience rather than one in London. He had been the one pouring tea for the Dowlers in that July 2011 meeting at which Rupert Murdoch so assiduously apologized. Lewis hitched himself to Klein, and they labored to forestall punitive federal action against the company under the Foreign Corrupt Practices Act. Full disclosure to Scotland Yard in the UK and the feds in the US promised the best path. As an anonymous but conveniently knowledgeable source told Lewis’s old paper, the Telegraph, the arrests at the Sun are “a mark of the absolute determination of News Corporation to drain the swamp.”

  Staffers at the Sun, however, were on the brink of revolt as Klein’s team directed police to key emails, notebooks, and phone records. Some of those arrested held the paper’s most-senior positions, including a deputy editor, the chief reporter, the chief foreign correspondent, and the news editor. Trevor Kavanagh, the Sun’s associate editor, who was a columnist and occasional Murdoch dining companion, spoke out twice on BBC radio. “The newsroom is full of people who feel deeply unhappy about the way that their colleagues, who they’ve worked alongside for sometimes decades, and who they respect and admire as supremely professional operators, have ended up being arrested, searched, put on police bail and suspended from their duties,” Kavanagh said. He called the investigation a witch-hunt but saved special contempt for News Corp’s role. “Certain parts of the company are actually boasting that they’re sending information to the police, which has put these people I’ve just described into police cells.”

  Rupert Murdoch flew to London to quell the Wapping Rebellion. He promised to keep the arrested Sun employees on staff until any conviction. In a private meeting with several Sun journalists who had been arrested, Murdoch signaled they retained his affinity. “I don’t know of anybody that did anything that wasn’t being done across Fleet Street and wasn’t the culture. We’re being picked on, I think,” Murdoch said, his remarks captured by digital recorders hidden by more than one of the Sun journalists present and later leaked to Private Eye and Exaro News. “We’re talking about payments for news tips from cops. That’s been going on for a hundred years, absolutely. . . . It was the culture of Fleet Street.” He said that he may have panicked: “We might have gone too far in protecting ourselves.” Murdoch then announced the creation of the Sun on Sunday, promising to reclaim the most profitable day of the week and holding out the prospect of more jobs to boot. His pledges reduced internal pressures but did little to stave off further revelations.

  On February 27, 2012, the Leveson judicial inquiry released emails from 2006 suggesting Rebekah Brooks knew that Glenn Mulcaire had been paid more than one million pounds to hack into cell phones for News of the World. Two days later, James Murdoch resigned from News International.

  The company presented the resignation as a long-planned move to allow him to take up a more global portfolio at the company. But in Britain his credibility was spent. It did not help that Prime Minister David Cameron found himself on foreign soil again fielding questions from reporters about News Corp. He had addressed the Milly Dowler revelations from Kabul back in July 2011; more than six months later, at a press conference in Brussels about the flagging economy of the European Union, Cameron once again attempted damage control.

  Rebekah Brooks had been given a retired police horse, Raisa, by the top brass of the Metropolitan Police in 2008, a gift that appeared to violate Scotland Yard’s policies on handling former workhorses. Reporters for the Telegraph who had learned about Raisa had badgered 10 Downing Street’s press shop for days asking whether Cameron had ever ridden the horse. The questions were swatted aside for days as absurd.

  From Belgium came Cameron’s tortured admission that yes, in fact, he had ridden the retired horse given to Brooks by the Metropolitan Police. He started by apologizing for any confusion that had emerged and emphasizing his ties with Charlie Brooks rather than Rebekah: “He’s a good friend, and he’s a neighbor in the constituency,” Cameron said.

  “Before the election, yes, I did go riding with him,” Cameron admitted. “He has a number of different horses and, yes, one of them was this former police horse, Raisa, which I did ride.” The closely knit Murdoch press, senior police executives, and the nation’s leading politicians were captured in a single canter. Such untimely reminders of coziness gave heartburn to executives in Wapping and in Manhattan. The Murdochs vastly preferred being the target of a punch than of a punch line. They knew how to fight back.

  DURING THIS time, Rupert Murdoch’s British papers were creating mischief for Cameron, whom Murdoch considered weak; undercover reporters for the Sunday Times captured a Tory fund-raiser as he seemed to be promising “premier league” access to the prime minister for donors who gave more than £200,000. The fund-raiser had to resign, and Cameron was forced into a series of embarrassing admissions about his meetings with donors. Meanwhile, the Sun kicked off what would become a two-month campaign against a consumption tax on pasties, a sort of Cornish calzone. It was a minor element of a much broader bill, but Chancellor George Osborne ultimately folded in the face of the tabloid’s relentless coverage.

  In New York, News Corp executives quietly girded for more bad headlines as they sold a division called NDS, a satellite TV encryption company vital to Sky TV’s enterprises in the UK and elsewhere. News Corp acquired the Israeli start-up in 1992, later taking the company public and making nearly $2 billion in 2008 when selling its stake down from 67 percent to just under half. News Corp retained, as was its frequent practice, effective control. James Murdoch served on its board, as well he might: NDS served as BSkyB’s chief smartcard vendor. Instead of repeatedly replacing the pricey boxes that sat above or below television sets, News Corp invested in NDS smartcard technology. The cards themselves were cheap and their technological protections could be continually updated.

  In March the technology giant Cisco reached an agreement to buy the company for $5 billion from News Corp and its investment partner. NDS was about to receive some very unwelcome attention. The BBC-TV investigative show Panorama had teamed up with a senior correspondent at the Australian Financial Review, Neil Chenoweth, who had previously written a critical biography of Murdoch. (The AFR is owned by Fairfax Media, Murdoch’s largest newspaper rival in Australia.) Chenoweth had obtained 14,000 emails involving NDS contractors and computer pirates and used them to piece together what he concluded was a multiyear and multifaceted plot to sabotage the company’s competitors. News Corp had derailed a related lawsuit filed by the French media conglomerate Vivendi, which had accused News Corp of intercepting its smartcard phones. Another lawsuit was decided in News Corp’s favor. But in late March 2012, AFR and BBC’s Panorama each presented a hard-hitting report within eighteen hours, in which they mined familiar veins. Computer hackers accused former police officers working for NDS of encouraging criminal behavior. The two news organizations posted the emails for the public to sort through. That was intended both as an experiment in “crowd-sourcing” further reporting and as a way to strengthen their case to British authorities that the full emails should be made public.

  News Corp officials took the stories as intentionally hostile acts. Rupert Murdoch angrily posted tweets against “old toffs and right-wingers.” “Seems every competitor and enemy piling on with lies and libels,” he tweeted. “So bad, easy to hit back hard[,] which preparing.” He had given fair warning. The company’s various divisions struck back in unison against Chenoweth, the Australian Financial Review, and the BBC. In Australia, News Ltd CEO Kim Williams accused Chenoweth of relying on stolen emails and said the journalist had “manipulated and often misunderstood” the facts. Williams challenged the Australian Financial Review to “put up or shut up”—to hand over evidence of wrongdoing to the Australian federal police proving its allegations, as though publishing were not itself an act of revelation. News Corp chief operating officer Chase Carey charged that “Panorama presented manipulated and mischaracterized emails to produce unfair and baseless accus
ations.”

  Lawyers for News Corp wrote letters cautioning other British and Australian publications not to rely on the BBC and Australian Financial Review reports for their coverage. In New York, a News Corp official privately denigrated the investigative pieces to me as wildly overheated: Technology companies often relied on computer hackers to monitor and even test their own shortcomings and those of their competitors without engaging in harmful or criminal activity. I thought the BBC and AFR made a fairly persuasive case from the documents they had obtained and presented, though I was open to its refutation. Absent firm proof contradicting the arguments, and given the unreliability of the company’s past denials involving operations in the UK, I asked the official, how can you and News Corp reasonably expect the benefit of the doubt? The News Corp official had no answer.

  Meanwhile, leaks had confirmed that OfCom had stepped up its review of whether News Corp was a “fit and proper” controlling owner of BSkyB. In early April, James Murdoch stepped down as nonexecutive chairman of BSkyB too. His retreat from the UK was nearly complete. Two days later, on April 5, Sky News admitted that it had hacked into the emails of a man who had faked his own death. It had also illegally obtained access to the emails of a suspected pedophile. The managing editor of the cable news channel had approved both seemingly illegal acts.

  It was a straight flush. The five most important Murdoch news outlets in the UK either conceded breaking the law or faced credible accusations of criminal activity.

  ON APRIL 25, 2012, Rupert Murdoch took his turn at the Leveson Inquiry. He had prepared in arduous rehearsals with Joel Klein and the company’s new general counsel, Gerson Zweifach, who, like Brendan Sullivan, was also from Williams & Connolly. Murdoch would not be the out-of-touch octogenarian badgered by MPs the previous July. Murdoch calmly apologized for not keeping a more careful eye on News of the World. “I have to admit that some newspapers are closer to my heart than others. But I also have to say that I failed,” Murdoch said.

  Despite that admission, the media mogul denied any personal culpability and defended both James Murdoch and Rebekah Brooks, saying other British company officials had executed a cover-up. That admission did not seem scripted; it caused Zweifach to shoot up from his chair to catch Murdoch’s eye. Judge Leveson immediately rebuked the lawyer, ordering him to sit down. At another moment, Murdoch took a shot at Daily Mail editor Paul Dacre, while explaining that his lawyers had expressly told him not to do so.

  At key moments, Murdoch interrupted, challenged, even jabbed his questioner, lawyer Robert Jay, if only to yield respectfully when Judge Leveson intervened. At times, Murdoch seemed to relish the testimony. But he looked alone sitting at the table, without even James to intercede, as he flipped through thick binders of evidence while parrying Jay’s attacks. No one had been able to tie Murdoch directly to hacking or even to corruption. For Leveson, the key question remained the undue influence, or even occasional control, Murdoch exercised over British cabinets and hence public policy. As Jay kept circling the riddle of whether Murdoch pursued his ideological beliefs or his business interests, Murdoch professed humility. He explained why he rebuked Sun editor Kelvin MacKenzie for the jubilant April 1992 front-page headline (“It’s the Sun Wot Won It!”) after Conservative prime minister John Major beat Labour’s Neil Kinnock. “We don’t have that kind of power,” Murdoch demurred.

  The extraordinary lengths to which politicians went to court him—Blair flying to an island off Australia, Gordon Brown to Idaho, Aussie prime ministers to New York, David Cameron to a Greek isle—were unnecessary, Murdoch said: “If any politician wanted my opinions on major matters, they only had to read the editorials in the Sun.” Murdoch portrayed these encounters as completely mundane, as though he had bumped into a neighbor at the supermarket.

  Murdoch’s papers may have helped elect or at least anoint a string of winners in the UK—Thatcher, Major, Blair, Cameron—and helped topple an Australian prime minister in the 1970s (and would be poised to do so again). But Murdoch claimed his influence on politics and policy was vastly overstated. As Jay drilled down more deeply, the media mogul declared it was illogical to think financial imperatives drove his editorial stances. If they did, he said, he would have stuck by the Conservatives at every election, like the Telegraph. The Tories were better for business.

  Under Blair, Jay pointed out, Labour softened its stance on media ownership, labor unions, the euro, and other policies dear to Murdoch’s heart. Lance Price, a former press aide to Blair, called Murdoch effectively a cabinet member—indeed, one of only three people other than Blair whose opinion counted in making government policy. Murdoch insisted that he was “oblivious” to the commercial advantages of one politician holding office over another and had neither requested nor received any business favors from politicians, including Thatcher and Blair. “I’ve never asked a Prime Minister for anything.” But Murdoch did not need to do anything so “cack-handed,” Jay said, sending American reporters scurrying to online dictionaries. When Murdoch wanted to know more about the Italian government’s sentiment toward News Corp’s efforts to acquire a television network in that country from Silvio Berlusconi, Blair called Premier Romano Prodi to learn more.

  And Jay challenged Murdoch’s memory and his word, with documentation of a luncheon he attended with Thatcher in early 1981 as he sought to take over the Times newspapers. Although he had maintained he had never ever spoken to Thatcher about the matter, a senior aide to Thatcher had taken notes, filing a memo titled, “Commercial—in Confidence.” At the lunch, requested by Murdoch, he explained his plans to cut costs paid to the unionized labor force. (The Times had been losing money but the Sunday Times was projected to be profitable the following year, a point Murdoch did not make at the lunch.) Murdoch did not ask Thatcher to avoid tying up his bid in endless regulatory reviews. He did not do anything so “cack-handed.” One of Thatcher’s aides, Woodrow Wyatt, wrote a note saying that he had told Murdoch that government supported the bill needed for his acquisition of the Times newspapers. “Margaret is very keen on preserving your position. She knows how much she depends on your support. Likewise you depend on hers in this matter.”

  Thatcher’s trade minister, John Biffen, approved the bid, and the government did not refer the decision to a commission that reviewed mergers and corporate consolidation. Murdoch’s bid, on the merits, may well have been the best the previous owners could have secured. But none of the other suitors received a private audience with the prime minister to set out his case.

  Former prime minister John Major later alleged, under oath, that Murdoch had not asked but demanded at a private dinner in early 1997 that he retreat from the integration of the country’s political and economic destiny with Europe. Murdoch set the shift as a condition of his newspapers’ support. Major refused and Murdoch’s papers switched to Labour.

  Murdoch also had expansive discourses with Tony Blair over the euro, which the prime minister was eager to join and Murdoch opposed. Blair needed only to have read the editorials of the Sun, as Murdoch said, to learn the news executive’s stance. But Murdoch expressed his opposition in person, also at Chequers. Blair did not change his government’s position. But he did agree to schedule a referendum so British voters could weigh in on whether to adopt the common European currency, just as the Sun had demanded. It served as a break on momentum toward the euro—and a sign Blair was willing to bend to acknowledge Murdoch’s wishes.

  At the Leveson Inquiry, Murdoch said he never asked David Cameron to reduce the amount of money the BBC received from mandatory fees on all television owners. But in denying that he made any request to Cameron, Rupert Murdoch seemed to concede he had raised the other topic with his predecessors.

  “I’d been through that with previous prime ministers and it didn’t matter what they said, they all hated the BBC and they all gave it whatever it wanted,” Murdoch said. Cameron’s cabinet froze the BBC license fee for six years amid the recession; the broadcaster’s budget was
to be cut 16 percent.

  Around and around Robert Jay and Rupert Murdoch went, in front of Justice Leveson. Thinking he was out of hearing of others in the room, Murdoch turned to his lawyers during a break and spat out, “Let’s get this fucking thing over with today.” The questioning continued into the next day. Murdoch became more contrary.

  Murdoch savored settling scores. He suggested that a pecuniary motive drove the former Sunday Times editor and ex-Sky chairman Andrew Neil: “Mr. Neil seems to have found it very profitable to get up and spread lies about me, but that’s his business,” Murdoch said. Former Sun editor David Yelland’s contention that most News Corp editors wake up in the morning wondering what Murdoch would think of the day’s news inspired a curt rebuttal: “I think you should take it in the context of Mr. Yelland’s very strange autobiography, when he said he was drunk all the time he was at the Sun.”

  While Murdoch said he bore corporate responsibility for any criminal actions in his newsrooms, he assumed no personal culpability for creating a culture that allowed it, even cultivated it. He, too, was a victim, he testified.

  LESS THAN a week later, Murdoch’s antagonists in Parliament had their revenge. Led by John Whittingdale, the Parliamentary Committee on Culture, Media, and Sport unanimously found that it had been misled in previous testimony by Les Hinton, by Tom Crone, and by Colin Myler. On a partisan split—the Labour and Liberal Democrat members against the Conservatives—the committee declared itself to be “astonished” by James Murdoch’s incuriosity as an executive. MP Tom Watson read aloud the majority’s further conclusions. “We found News Corp carried out an extensive cover-up of its rampant lawbreaking,” Watson said. “Its most senior executives repeatedly misled Parliament. . . . In the view of the majority of committee members, Rupert Murdoch is not fit to run an international company like BSkyB.”